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August 1, 2013

Advisors ‘Haven’t Fully Committed’ to Social Media, SEI Expert Says

As use by clients and companies in the industry expands, financial advisors seem to be apprehensive about using social media to grow their practices

Recent studies show that the general public and financial services are very focused on the use of social media. Financial advisors, however, have room to catch up.

“We found that nine out of 10 [financial services] companies currently use social media and most agreed that compelling content is vital,” said Norah Denley, distribution and technology research for LIMRA in a press release on Thursday. “Posting content that provides value to an audience is just as important — if not more so — as reaching the audience in the first place.”

A recent Pew study, for instance, found that more than two-thirds of all adults who use the Internet on a regular basis rely on social networks.

To understand the industry’s response to this widespread rising use, LIMRA, formerly known as the Life Insurance & Market Research Association, polled 53 large companies in both the United States and Canada. The highlights regarding social media use are:

Facebook: 65% usage for building community; increasing use as a customer-service channel;

LinkedIn: Close to 70% usage for recruiting;

Twitter: 60% usage for brand awareness;

YouTube: 83% usage for brand awareness;

Google+: 58% usage for brand awareness and building community;

“The most popular social media sites continue to grow in influence and a number of new sites are rapidly gaining attention,” LIMRA explained. “Financial services companies are still figuring out where they need to have a presence and where they can abstain.”

Advisor Abstinence

Compared with the general public and the financial services firms, financial advisors appear to be much slower at adopting social media for their businesses, said SEI on Wednesday.

SEI polled 200 advisors and found that just 28% said they use social media to promote their practices online; only 31% use it for social engagement. Furthermore, those that do so use social media in a limited fashion.

According to SEI, more than half of respondents said they are experimenting with social media via only LinkedIn profiles. And, close to a-third of those surveyed, 29%, said they have no online presence.

“Research shows that the majority of Americans are using social networks; if advisors can reach that audience effectively there is an opportunity for them to reap tangible business benefits,” Anderson explained. “It’s important to note, however, that being consistent and strategic is vital to long-term social media success.”

When asked why they are slow at adopting social media, advisors shared the following issues:

29%, broker-dealer concerns;

25%, generating frequent and relevant content ;

21%, the future regulatory environment;

15%, the time and cost.

Ironically, most advisors polled, 65%, indicate that they use or would like to use social media for client leads, but just 13% said they actually had secured a client through social media.

“I think many advisors want to use social media more, but they’re just not sure how to do it effectively and what resources to dedicate to it,” said Jill Ciccarelli Rapps, CFP, partner and financial advisor with Ciccarelli Advisory Services in Naples, Fla., in a statement. “We launched our social media program using a phased process that made sense for our business, and we are beginning to use it regularly to engage current clients and create new relationships.

“We still have a lot to learn, but we believe using social media will be an important step in keeping up awareness of the services we provide to our social media community,” Ciccarelli added. “Patience and consistency are key and after several months, we are beginning to see results from our efforts.”

Still, some firms — from Morgan Stanley (MS) to Raymond James (RJF) — have been taking important steps to encourage broader use of social media by advisors.

In mid-July, for example, Raymond James formed a partnership with Hearsay Social for financial advisors who want to build more customer relationships and grow their businesses through social media. (Previously, it had worked with another IT vendor for such work.)

"Social media engagement is becoming critical to helping advisors manage and build their brands and support their client and prospective client communications," said Michael White, chief marketing officer at Raymond James, in a press release.